Car prices in India may drop as production of Auto Grade Steel begins

Cheers prospective car buyers as you may save more than you hoped when you buy your car next year. Auto activities are increasingly expanding in India and to put a smile on both ends of the market, JSW Steel has set up a new steel plant to make High Grade Steel here in India.

JSW Steel, India’s largest private sector steel company, announced its establishing of a new Cold Roll Mill (CRM-2) plant at its Jindal Vijayanagar Steel Ltd. (JVSL) plant at Toranagallu in Bellary-Hospet area of Karnataka. Japanese steel major JFE is in collaboration with JSW Steel for setting up of the facility, with 15% stake with Rs. 4,500 crore investment.

This new Cold Roll Mill (CRM-2) will produce continuously annealed cold rolled coils of steel bearing strength of about 980 MPa. It will be India’s first ever facility to manufacture such high end steel for auto industry, which are otherwise imported. JSW believes to witness exponential growth in demand for this steel in coming years as India is on road to becoming a global hub for auto makers. Current plan involves manufacturing capacity of 2.3 million tonnes of automotive grade steel.

Apart from helping cut costs of body panels in two-wheelers to SUVs, other industries that import such steel will also be benefited now from expenses such as packaging, shipping, fluctuating foreign exchange rates and of course time factor. Said savings may sum up to 15 percent of manufacturing cost incurred. However, CRM-2 will reportedly manufacture only outer body panels of vehicles.

JSW Steel believes that car manufacturers in India will be able to save up to 15% on manufacturing costs of the body, once the start using this made-in-India steel, instead of importing it. They have been in talks with car makers like Maruti, Toyota, Mahindra, Honda and Ford for the last one year, about this new venture of theirs.

There are other car makers as well who have shown interest, including the likes of Honda and Nissan. In all, this is a very good move for the auto industry. Car makers will surely pass the savings onto the end user, but how much is passed on, remains to be seen.